MAXfunds Ferris on Free Rental Markets Without Controls
Jonas Ferris is a wealthy young
man...and earns at least six times median wage reported in the United
States, which hovers around $50,000 -- you do the math. Ferris grew up
in New York City in comfortable, upper class surroundings -- but in his
view times have changed and no longer required rent stabilization
oversight by city officials. New York City polices rent increases to a point, meaning if you pay $1,650 per month the landlord can not increase your rent "at will" to $3,000 -- the landlord must follow city guidelines. The result of city rent control, according to Ferris, allows senior citizens to keep their apartments at $250 a month so they can afford homes outside Manhattan.
Ferris, who founded MAXfunds.com, writes, "It’s not uncommon for a real working person to live an hour-plus commute away from New York to get a semi-affordable apartment, so a retiree can watch Matlock in a $200 apartment steps away from where the actual commuter works. This discourages people that work --and pay more taxes and spend more money-- from moving to New York in the first place, and is an environmental disaster, increasing traffic and energy consumption. It discourages companies from locating or starting in New York."
But wait; don't take Ferris' disaster scenario to mean he is a green sort of guy. He advocates free market economy in the city that never sleeps. So, if the city drops restrictions on rent increases, Ferris contends the higher-end rents would come down. Think -- a $5,240 per month rent might actually fall to $4,000 a month (a rate requiring a salary of $200,000.)
Ferris, who holds an MBA and appears on FOX News regularly, buys into the new economy begun in the United States post 9-11. Ferris and others on Wall Street live as though, and truly believe as though, triple digit salaries are a mainstay in the United States. While it is true that since year 2002 the wealthy floated the United States' economy past a potential devastating economic downturn, economists in line with Ferris have decided that the wealthy are the only consumers who matter to the United States' economy.
Let us examine Ferris' plan hypothetically. Effective 1 January 2008 New York City no longer restricts landlord rent increases. This writer, who pays $1,365.34 a month (and per guidelines does not earn enough to qualify for that rent today,) would see his rent increase to what the landlord estimates is "true market value" on a 10-foot by 13-foot square room in the east 70s. That rent, according to the lease, is $2,876.00 a month. This writer does not bring home enough to even cover that market value rent. So, this journalist with a job requiring a Manhattan residence must not only relocate to a less expensive area, but find a new job somewhere else. Those in journalism already know that salaries in this profession outside of New York City average between $25,000 and $35,000, or between 50 percent and 35 percent less than this writer's current wage.
As Ferris contends, under relaxed rent regulations the landlords win and thus they become happy men who in turn improve upkeep on existing apartments or sell the property to developers. The six and seven story apartment tenements lining many neighborhoods in Manhattan today would come down, and in their place developers would build new towers to house more people. While new buildings offer more space per apartment (and usually offer legitimate one bedrooms,) the average monthly rent on those new apartments starts at $3,000 (with larger spaces averaging $10,000 per month.) For one to qualify for a $3,000 per month rent one must earn at least $150,000.
Landlords win either way. Under the idea Ferris proposed those professionals in Manhattan who do not earn triple digit salaries would be forced to leave, and in their place the current commuters -- 20-something and 30-something Wall Street types in Ferris' generation -- would move into the city and take up apartments from those who could no longer afford to stay.
New York City may indeed be better off without this writer and other lower wager earners as the Wall Street boom further sterilizes this once colorful city -- and in all fairness Ferris does not make that claim -- however what Ferris and others in his class do not understand is that despite rent stabilization in Manhattan the wealthy still push out the middle and lower-end simply because they can afford a 10-foot by 13-foot box at $16,000 per year on top of their $5 million spread in Westport, CT. There are zero options for all others.
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